new perspective is virtually challenging the traditional command-and-control
structures. This network trend is not limited to the business enterprise alone;
non-profit and governmental organizations fall equally under its sway. The
network enterprise does not follow the same rules as the classic corporate
model. In order to adapt to this Next Reality, the leaders of an organization
must dispense with six fallacies that once upon time made perfect sense.
Fallacy #1: Management must focus on the internal operations of the enterprise
Next Reality: Every dimension of the network enterprise must be client-facing.
Even senior executives can ill afford to manage the firm's resources apart from
their impact on the end customer. Consider it managing from the outside in. If a
process limits the organization's capacity to take advantage of new market
opportunities or suppresses innovation, it must be changed.
Fallacy #2: Geography defines the ecology of the enterprise
Next Reality: Recently, I was in Europe advising a client, an enterprise in the
financial services sector that operates independent business units in countries
around the globe. Until recently, my client did not take advantage of its
network opportunities. Each national business unit functioned as a silo, and as
a result, each one carried out a needless replication of tasks. The global
company also failed to pick up on successful experiments that were taking place
in parallel universes, that is, initiated by sister business units. My client is
now developing creative ways to take advantage of its network, leveraging
resources and brand across business units. The company is now thinking
horizontally instead of thinking vertically.
Fallacy #3: Technology drives business operations
Next Reality: Technology does not drive organizational change; it is only a tool
for change. I have witnessed far too many enterprises imploding once seduced by
a new software system. It is much more critical for an enterprise to build
around its relationship capital. People still matter most. Managers would be
wise to map out the flow of knowledge and relationships that truly create value
in their organizations, and then find the right technology to enhance that
process. Knowledge management applied in a vacuum is a waste of resources.
Fallacy #4: Hire for specialized knowledge
Next Reality: Generalists are a dime a dozen. Narrow specialists, on the other
hand, risk isolation and inaccessibility. Really valuable employees provide
specialized knowledge that adds to the core competency of the enterprise. Strong
managers aim to create a culture where unique knowledge will be produced and is
made accessible to the network. It is easy to underestimate the importance of
trust. Without trust, access remains stunted.
Fallacy #5: Performance management is most effective when it rewards individual
Next Reality: The individual was the primary productive unit of the classic
corporate enterprise. In the network enterprise, the team moves to the fore.
Employee evaluation and compensation therefore must incorporate team performance
measures. Individual employees should expect to shift between organizational
structures and adapt to new functions as needed. Job descriptions are at best
Fallacy #6: Employees who demonstrate exceptional competency should be groomed
as future leaders.
Next Reality: The move from command-and-control structures to a network
enterprise does not imply the decline of leadership. A new style of leadership
emerges. As strange as it sounds, the manager ceases to be the expert. If you
think about it, we should expect knowledge workers within their competency area
to know more than their boss. The right metaphor for leadership is the conductor
of an orchestra.
Each individual musician knows her instrument better than the conductor, but it
takes a special kind of talent to arrange and harmonize the full range of
instruments. Here's another sure sign of a network leader: A willingness and
capacity to be in constant learning mode.
In summary, the network enterprise feeds off effective collaboration across
fixed boundaries. A new generation of leaders will excel in taking advantage of
the peculiarity of their organizations to energize and support valuable
(David Batstone is the author of Saving the Corporate Soul and teaches business
ethics at University of San Francisco, United States)
New Page 1
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